FICCI survey predicts modest outlook for textile sector

According to the survey, production and exports have a moderate outlook. Investments for expansion are not expected for the next six months. It listed inventory above average levels and concluded that hiring has a bleak outlook.

In October-December 2015, 40 per cent respondents in textiles sector reported higher production levels as compared to the same quarter last year. Another 40 per cent indicated no growth in the output while the rest indicated lesser production.

In October-December 2015, 60 per cent of textile respondents reported higher number of orders as compared to the previous quarter.
Around 53 per cent of the respondents reported lower quantum of exports in the same quarter on a y-o-y basis.

The survey found average capacity utilization hovering around 82 per cent in textiles sector with almost 40 per cent of the respondents operating at same capacity utilization as that of last year.

Three quarters of the respondents are not planning to increase their capacity in next 6 months. However, some are planning to increase their capacities by as much as 40 per cent.

Around 53 per cent of the respondents in textiles sector have reported that their current inventory level is more than their average inventory level.

Almost 74 per cent respondents indicated that they are not planning to hire new workers in next three months. Others plan to increase their work force in the range of 10-15 per cent.

Though the average cost of credit for the sector is around 10.6 per cent but for some manufacturers credit is available at a comparatively higher cost of 14 per cent (approx.).

Fifty per cent of the respondents expect manufacturing growth to remain at same level in coming months.

FICCI has suggested easy availability of finance at lower interest rates and improved power supply at reasonable rates to stimulate growth in the textile sector. It has also suggested increasing duty drawback rates, widening the scope of export incentive schemes, introduction of GST, availability of skilled labour and wider labour reforms and a strong focus on improving infrastructure and utilities.

Sixty per cent respondents indicated an increase in cost of production and the prime reasons for the inflated production cost has been mentioned as higher input cost and increased labour cost.

According to the survey, units in textiles sector are significantly affected by high prices of raw materials and inverted duty, labour related issues, deficiency of power, lack of skilled manpower, competitive pricing from the Bangladeshi firms and low domestic demand. (SH)

Fibre2Fashion News Desk - India